According to that formal letter, Gary Lauder, the new owner and chairman of OnLive, created a new company named OL2 on August 14th. That was three days before the company conducted mass layoffs on Friday, August 17th, with about half of the employees laid off. Then he acquired nearly all of OnLive's assets which also included their intellectual property and the name "OnLive" itself for only $4.8 million, and transferred them to the new OL2 company. That way he ensured the uninterrupted functioning of the OnLive cloud gaming service and of the new company.

The formal letter now reveals more information. According to it OnLive was $18.7 million in debt, but that doesn't include the money it owed in the future for leases and other contractual
obligations. It also reveals more information on why the company was sold to Gary Lauder for as little as $4.8 million. Here's an excerpt:

The Assignee concluded, in light of OnLive utilizing all of its remaining cash on hand to satisfy its final payroll obligations, that had the sale to the Buyer not taken place, the Assignee would have been left with inadequate capital to fund the significant costs to preserve and market OnLive’s patents and other intellectual property, thus greatly reducing expected recoveries essentially to those of a forced piecemeal auction. The sale that was concluded with the Buyer will likely result in funds being available to pay a dividend to general unsecured creditors. The Assignee’s conclusions are supported by independent valuations of assets commissioned by the Assignee.